LONDON — The United Kingdom economy expanded by 0.6 percent in the second quarter of 2026, surpassing analyst expectations and signaling a steady recovery across key service and industrial sectors. The Office for National Statistics released the preliminary figures on Friday, August 14, 2026, showing that growth accelerated from the 0.3 percent expansion recorded in the first quarter. Business investment rose by 1.2 percent over the period, driven largely by increased capital expenditure in green energy projects and technology infrastructure across London and the southeast.
Chancellor of the Exchequer Rachel Reeves welcomed the data during a morning briefing, stating that the figures reflect returning confidence among commercial investors and small businesses. Consumer spending also rebounded moderately despite ongoing cost-of-living pressures, supported by a slight easing in retail inflation and steady wage growth. However, manufacturing output remained relatively flat amid supply chain headwinds and lingering export constraints affecting trade with the European Union.
Financial markets responded positively to the announcement, with the British pound strengthening against major international currencies and the FTSE 100 index posting modest gains. Economists noted that while the quarterly expansion exceeds the Bank of England's prior projections, persistent wage pressures in the service sector mean interest rate cuts are likely to proceed gradually through the remainder of the year.
What drove the stronger-than-expected UK GDP growth in Q2 2026?
The stronger economic performance was primarily driven by a 1.2 percent increase in business investment and robust expansion across the services sector, which offset flat manufacturing output. Increased spending on digital infrastructure and renewable energy projects further bolstered national output during the spring quarter.
The Office for National Statistics is scheduled to release revised second-quarter GDP figures and a detailed sectoral breakdown on September 30, 2026.